Monday, March 28, 2011

Some title companies are now requiring buyers to wire funds to their office if the funds due at closing exceeds a certain amount. In the past, just about every title company allowed buyers to bring a bank check. If your buyer doesn't know about this, it could delay the closing because it sometimes takes a few days to arrange for a wire.

Not every title company has this new requirement, but it's certainly worth asking about.

Thursday, March 24, 2011

HUD stands for the Department of Housing and Urban Development. HUD is the US government agency that oversees the FHA loan program.

A HUD home is a house that used to have an FHA mortgage, but it went into foreclosure. HUD now owns the property.

How to Buy a HUD Home

• HUD homes are sold by bidding on them.• HUD lists a sales price on their web site, but you can bid more or less than the price listed on the web site.• You must use a real estate agent to place the bid for you.• Not every real estate agent is signed up with HUD to place bids, but it is very easy and quick for them to do so.

• Occasionally, HUD will offer special programs so they can sell HUD homes faster.• Some examples: HUD homes for $100 down, closing costs paid by HUD, special incentives to real estate agents.• Check the HUD home web site for details and to see if any specials are in effect now.

Financing a HUD Home

• HUD will accept any type of loan or cash for one of their properties.• If the financing is going to be an FHA loan, the web site listing will tell you which types of FHA financing are available for that particular property.

Common Misconceptions

• You do NOT need to get FHA financing to buy a HUD home.• HUD homes are NOT just for first-time home buyers. Anyone can buy a HUD home.• An individual CANNOT buy a HUD home for $1 down. That program is reserved for non-profits and government agencies.• NOT all HUD homes are destroyed. Some are in good shape and some are in bad shape, just like other properties.

Want to watch our video of this tip? Check it out on our web site by clicking here.

Want to make sure your loan closes? Call the Mortgage Experts at 303-345-3683.

Sunday, March 6, 2011

Here's what you need to know about using various types of miscellaneous income to qualify for a mortgage.

Alimony or Child Support

• A divorce decree or other legal document must show that the income will continue for at least three years• Must document that full, regular, and timely payments have been made for the past 12 months• 6-12 months is acceptable, provided the alimony or child support is not more than 30% of the total income used to qualify the borrower

Capital Gains Income

Only acceptable if the borrower can document the following:• Capital gains income has been received for the previous two years – income tax returns are required. The income is then averaged over the past two years.• The borrower must document that they have additional property or assets that can be sold to pay the mortgage

Disability Income

• If the income will continue for at least three more years, it can be counted• If the borrower is currently receiving short-term disability, which will be converted to long-term disability in the next three years, and the payments will decrease, the lower, long-term payments must be used

Income from Employment-Related Assets

• Examples: 401(k), IRA, SEP, and KEOGH retirement accounts – income is NOT being withdrawn• The assets must be available for withdrawal without penalty – borrower must be old enough to withdraw• The assets must be owned individually by the borrower, unless the only other owner is the co-borrower• Only 70% of the assets can be counted• Income is calculated as: total assets x 70% / 360• Example: $500,000 in assets would be calculated as $972 per month in income500,000 x 70% / 360 = 972

Retirement, Government Annuity, Social Security, and Pension Income

• Must document that the income is being received – W-2’s or 1099’s, retirement award letter, etc.• Must document that the income will continue for at least three years

Foreign Income

• Must have been received for the previous two years• Must be converted into US dollars

Foster Care Income

• Must have received the income for the previous two years as shown on tax returns• 12 months is acceptable if the foster care income is not more than 30% of the income used to qualify the borrower• Must document that the income will continue at a level high enough to qualify for the mortgage

Interest and Dividend Income

• Must show that interest or dividend income was received for the previous two years• Income is averaged over the past two years• Must show that it will continue for at least three years

Non-Occupying Co-Borrower Income

• Example: parents buy a condo for their child – often referred to as a “kiddie condo” loan• Income from the non-occupying co-borrower is allowed for FHA loans• It is not allowed for conventional loans, unless the occupying borrower can qualify by themselves, without the income

Tip Income

• Must document that the income has been received for the previous two years• The tip income is averaged over the previous two years• The borrower’s employer must state that the tip income is likely to continue

Want to watch our video of this tip? Check it out on our web site by clicking here.

Want to make sure your loan closes? Call the Mortgage Experts at 303-345-3683.

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